Imperatives

Global Supply Chain Management
The ability to track and trace products all the way through the supply chain is needed for internal process control, cost control, and to satisfy both regulatory requirements on the security of the supply chain and consumer pressure demanding a more transparent supply chain. Market confidence demands that food suppliers show solid measures to combat threats from disease and contaminated foods, in particular traceability of product. Measuring and alleviating the carbon footprint is being driven by large retailers (such as Tesco and Sainsbury’s) and Food / Consumer Packaged Goods (CPG) suppliers have to respond. Getting a handle on the cost drivers into the supply chain is a key trend for the food market, especially as product lifecycles get shorter. Increasingly, CPG companies are successfully applying the lean concept of leveled scheduling to combat poor forecasting. This results in shorter lead times, reduced inventories, increased productivity, and improved customer service through ‘economies of repetition’. Real-time decision making, based on real-time information and intelligence, is vital across many business areas, for example, real demand information and collaboration along and across the entire supply chain, ensuring on-shelf availability. With a growing consumer awareness and calls from consumers for retailers to show their commitment toward sustainability, some of the larger retailers are trialing the provision carbon information on packaging.

Operational Excellence
The costs of inputs to the sector, from fuel to raw materials, have gone up globally. How organizations maximize utility from their inventory and manage input costs is critical for success and survival. With the need for cost reduction, organizations are looking to streamline systems such as invoicing, using smarter techniques in areas like procurement. There are also increasing pressures due to price erosion, which are exacerbated by rises in the cost of doing business (for example, energy and waste, labor, R&D, automation investment). Regulatory requirements are growing. In particular, group reporting requires single consolidation, which takes substantial time and resource. However, this could be streamlined. Mergers and acquisitions (M&As) are continuing and are based on fit-gap analysis of the product ranges at the front-end rather than being based on supply chain synergies. The difference is markets, customers, customer segmentation, and product types (GNFR and GFR), which are all key determinants for potential M&A transactions. Management information is fragmented because of existing internal structures as well as M&As, and pervades all levels of staff, not just at the executive level. Definition of correct metrics and ability to get at data is a tough nut to crack for the sector.

Business trends

Customer Loyalty and Branding Equity
Improving the understanding of customers and increasing sales is a key imperative for the sector. Once there is an understanding of the different needs of different types of customer, CPG companies must re-engineer their supply chain tools and processes so that the differentiated service offerings can be delivered and the true cost-to-serve is visible and transferable to the customer.

There is a strong trend toward internationalization, with global brands needing to be balanced with local preferences. As the credit crunch starts to hit consumer’s pockets, consumers are looking for products that offer the best value, focusing away from the bells and whistles and seeking a simple value message. Customers today are less likely to trust the marketing messages that organizations send out themselves. The messages from their peers have growing strength of influence.

Managing Internet reputation is key in the online world of today. Organizations need to understand who is saying what about them, and react appropriately. Aesthetics is of growing importance in today’s materialistic world, particularly with Generation Y. Creating a brand with the right aesthetic feel is key to managing image.

Product and Service Innovation
There is an increasing demand for healthy and seasonal foods all year round, which needs to be balanced with the continuing demand for convenience and environmental consciousness.

Environmental awareness is driving a consumer demand for less waste from packaging as well as the availability of products in the sizes that consumers require. Consumers see that this will also help them financially, reducing what they spend.

As product lifecycles decrease and customer expectations increase, the innovation process must balance reducing time-to-market with the ability to ensure that products are ‘right first time’ and hit the right spot with the customers.

Business eco-systems need to expand to include suppliers and customers alike, ensuring that products are being developed that meet customer needs and that these products can be both developed and delivered efficiently.

Today, the customer has a louder voice than ever before. As well as actively involving the customer in the innovation process, organizations need to look to the Internet to understand customer likes and dislikes and what they will be looking for in the future.

With efficiency in innovation a key requirement, simulation is seen as the way forward for testing out new product ideas in a way that keeps costs and waste down.

Impact technologies

Enterprise Resource Planning, Customer Relationship Management, and Warehouse Management solutions will be important as the wholesalers seek to update their IT systems and improve efficiency without incurring high up-front costs.

Warehouse management, Web-EDI (Electronic Data Interchange), and Supply Chain Solutions will allow wholesalers to cope with the rising demand from e-commerce and drive highly efficient operations.

Digital Signage is a relatively small area of IT spend at present, but one of growing interest for the sector due to the fact that retailers are seeking a single view of their customers and better alignment of their inventory and order management systems.

Management information will be improved by bringing together the fragmented data sources through Enterprise Information Integration and, in unison with Business Intelligence and dashboards, will give the business the on-demand intelligence that it requires at all levels.

Business Intelligence in the form of predictive analytics and dashboards will also help wholesalers better understand the end consumer, allowing them to measure the response to promotions, the effectiveness of their product shelf positioning, and the ability to plan their product strategy.

New Web 2.0 technologies can facilitate knowledge transfer and collaboration around the globe, both internally and externally, with retail customers as well as end consumers.

Web 2.0, through portals and interactive sites, is also a way to centralize and optimize transport, making sure that trucks never travel empty, lowering costs of each single transport.

Wholesalers will require real-time access to content information from any location through Enterprise Content Management. This can ensure that business information complies consistently with new regulations.

Service-Oriented Architecture can provide greater business agility by linking together the legacy systems from past M&As for a flexible solution, as well as positioning companies for future acquisitions.

Radio-frequency identification (RFID) is not being deployed at the item level due to its high-cost and barriers to use, but is of interest at the palette level and for specific luxury goods for traceability and tracking.

Remote sales forces will benefit greatly from the new Next Generation Mobile Solutions, as they seek to build relationships with small retailers. Next Generation Mobile Solutions will give them vital access to information from anywhere and on any device.

Manufacturing plants will benefit from new Enterprise Asset Management technologies, with asset location and status being available in real-time. With shorter product lifecycles, Innovation Management can leverage the creativity of the workforce by ensuring the best ideas are brought to maturity swiftly.